[OrwellianChild]

I think it depends on the "scummy, sabotage, and price-war tactics" bit. If a well-funded Uber can out-spend and temporarily out-price Lyft into bankruptcy/acquisition, they might gain some leverage. That said, plenty of equilibria exist in other networked service-based markets. A good example would be UPS and FedEx, which provide remarkably similar service profiles to remarkably similar service areas.

The matchmaking part of the equation is low-cost on a per-transaction basis, and most of the risk and operational cost lies with the independent contractors (the drivers with their cars). This makes the services straightforward to run and scale, meaning there is no inherent reason why one or the other would be "shut out" of a market.

We may see this shake out one of multiple ways that could include the two operating at different levels of the market (Uber on limousines, Lyft on ride-share/cabs). There may also be additional tools/services from one of the companies that upsets the balance in a more sustainable way (e.g. facilitation of ride-shares, carpools, or other less ad-hoc trips like daily commutes). Lots of room for growth and expansion in this space.

[fred_durst]

The FedEX UPS example doesn't apply because their services are limited by physical infrastructure. The have to buy/lease trucks and distributions centers. Uber and Lyft have no physical limits so the larger one can always undercut the other out of business once it has enough of a competitive advantage. Once Uber is the name brand service for consumers drivers will no longer have a choice and Uber can price squeeze Lyft to death.

[6cxs2hd6]

I think another difference is that the bulk of FedEx and UPS customers are businesses -- who typically are smart enough to allocate business among at least two vendors. Short-term this keeps your suppliers honest on price and service. Long-term it hopefully sustains more than 1 supplier. Even when an industry has one "gorilla" (e.g. Intel), business customers will try to sustain at least one "chimpanzee" (e.g. AMD).

However this dynamic is missing from consumer businesses.